Why Stifel Financial Stock Was Down on Wednesday

On Wednesday, optimism was in the air on the stock market, as investors were hopeful that the current tariff war might not be as damaging as feared. They were selective about the stocks they piled into, however, and one they avoided was Stifel Financial (NYSE: SF).

This was due almost entirely to the investment bank's first-quarter earnings report, which the market found wanting. Investors traded Stifel down by almost 4% in reaction, on a day when the S&P 500 index posted a nearly 2% improvement.

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Wealth management woes

For the quarter, Stifel's net revenue came in at just under $1.26 billion, which bettered the $1.16 billion in the same period a year ago. Yet that result was under the consensus analyst estimate of $1.3 billion.

The company whiffed far more badly on its bottom line result. Its non-GAAP (adjusted) net income fell dramatically over that one-year stretch, landing at $54.2 million ($0.49 per share) from Q1 2024's more than $163 million. Analysts had estimated a far higher per-share number, specifically $1.74.

One big culprit for the profitability decline was Stifel's global wealth management business -- the source of most of its revenue. What the company described as "higher litigation-related expenses" drove down the unit's pre-tax net income, to $126 million. In the same period of 2024, that profit was $290 million.

Looking forward to the future

In the earnings release, Stifel pointed out that the $1.26 billion top line is a new record for the first quarter. Admirably, the company acknowledged the setback in global wealth management, and it waxed bullish about the coming months despite the current macroeconomic headwinds.

"We remain optimistic about long-term growth, emphasizing the resilience of U.S. financial markets and the value our advice-driven model delivers during periods of uncertainty," CEO Ronald Kruszewski said.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.